Saap Energy v. Bell

United States District Court, Sixth Circuit

August 28, 2013

SAAP ENERGY, et al. Plaintiffs,v.RICKY BELL, et al., Defendants.

MEMORANDUM OPINION AND ORDER

THOMAS B. ROSSELL, Senior District Judge.

This matter comes before the Court on a motion to dismiss by Defendant Danny Basil. (Def.'s Mot., Docket Number ("DN") 41.) The Plaintiffs responded. (Pls.' Resp., DN 43.) The Defendant replied. (Def.'s Reply, DN 45.) The motion is now ripe for adjudication. For the following reasons, the Defendant's motion is GRANTED IN PART and DENIED IN PART.

I.

The Plaintiffs, SAAP Energy, Inc., and Saibabu Appalanei (collectively "SAAP"), bring multiple claims against a number of individual and corporate defendants relating to transactions in oil well purchases and leases. SAAP alleges that the Defendants "entered into a general objective, to engage in an ongoing scheme to sell investments in oil securities through false and deceptive information and practices for individual profit to the co-conspirators." (First Am. Compl., DN 34, ¶ 16.) In all, SAAP claims that the Defendants swindled it out of more than $2 million by misrepresenting the profitability, productivity, ownership, and environmental hazards associated with the wells.

The present motion to dismiss was filed by Defendant Danny Basil ("Basil"), an attorney from Glasgow, Kentucky. SAAP alleges that Basil's role in the Defendants' scheme was to "assure [investors] that they were buying legitimate properties and provide assurances of title to the oil leases and act as the attorney for closing and formation of holding corporations for investors." ( Id. ) With respect to Basil's alleged participation in the underlying scheme, SAAP brings the following claims against him: Count I (Civil Conspiracy); Count III (Fraud by Omission); Count IV (Civil RICO under 18 U.S.C. § 1962(c)); Count V (RICO Conspiracy under 18 U.S.C. § 1962(d)); Count VI (Unjust Enrichment); and Count X (Attorney Malpractice). Basil does not move to dismiss all of the claims. Rather, he only moves to dismiss Count I (Civil Conspiracy), Count IV (Civil RICO), Count V (RICO Conspiracy), and Count VI (Unjust Enrichment). The Court addresses Basil's argument on each count.

II.

The Federal Rules of Civil Procedure require that pleadings, including complaints, contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). A complaint may be attacked for failure "to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). When considering a Rule 12(b)(6) motion to dismiss, the court will presume that all the factual allegations in the complaint are true and will draw all reasonable inferences in favor of the non-moving party. Total Benefits Planning Agency v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citing Great Lakes Steel v. Deggendorf, 716 F.2d 1101, 1105 (6th Cir. 1983)). "The court need not, however, accept unwarranted factual inferences." Id. (citing Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)). Additionally, "[w]hen a court is presented with a Rule 12(b)(6) motion, it may consider the Complaint and any exhibits attached thereto... and exhibits attached to the defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein." Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008) (citing Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001)).

Even though a "complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). Instead, the plaintiff's "[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (citations omitted). A complaint should contain enough facts "to state a claim to relief that is plausible on its face." Id. at 570. A claim becomes plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). If, from the well-pleaded facts, the court cannot "infer more than the mere possibility of misconduct, the complaint has alleged - but has not show[n]' - that the pleader is entitled to relief.'" Id. at 1950 (citing Fed.R.Civ.P. 8(a)(2)). "[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Id.

III.

Basil first moves to dismiss the claim for unjust enrichment found in Count VI. To prevail under the theory of unjust enrichment, a plaintiff "must prove three elements: (1) benefit conferred upon defendant at plaintiff's expense; (2) a resulting appreciation of benefit by defendant; and (3) inequitable retention of benefit without payment for its value.'" Guerin v. Fulkerson, 354 S.W.3d 161, 165 (Ky. Ct. App. 2011) (quoting Jones v. Sparks, 297 S.W.3d 73, 78 (Ky. Ct. App. 2009)). SAAP's unjust enrichment claim against Basil fails the first element because it has not alleged sufficient facts to show that it conferred a benefit directly on Basil.

"In application, Kentucky courts have consistently found that the first element not only requires a benefit be conferred upon the defendant, but also that the plaintiff be the party conferring the benefit." Pixler v. Huff, No. 3:11-CV-00207-JHM, 2011 WL 5597327, at * 11 (W.D. Ky. Nov. 17, 2011) (collecting cases). In other words, it is insufficient to allege that the defendant derived some indirect benefit from the plaintiff. "[T]he requirement that the benefit be conferred on the defendant by the claimant seems to always be a requirement in practice." Dixie Fuel Co., LLC v. Straight Creek, LLC, No. 08-326-GFVT, 2011 WL 845828, at *4 (E.D. Ky. Mar. 8, 2011); but see Seye v. Cmty. Yellow Cab, No. 10-234-WOB-CJS, 2013 WL 1332430, at *12-13 (E.D. Ky. Feb. 13, 2013) (finding that a plaintiff did not need to directly confer a benefit on a defendant to state a claim for unjust enrichment).[1] "[A] claim for unjust enrichment requires that a plaintiff prove that she conferred a benefit upon the defendant." Pixler, 2011 WL 5597327, at *11. To "confer" a benefit for the purpose of unjust enrichment means "to bestow from or as if from a position of superiority or to give." Dixie Fuel Co., 2011 WL 845828, at *5 (internal quotation marks and citation omitted). Accordingly, to meet the first element of a claim for unjust enrichment, a plaintiff must allege that he directly conferred a benefit on the defendant. As the claim relates to Basil in this action, SAAP has failed to do so.

In Count VI, SAAP alleges that "[a]s a result of the fraudulent scheme, all of [the] Defendants... have been conferred pecuniary benefits at the Plaintiffs' expense." (First Am. Compl. DN 34, ¶ 133.) The Defendants allegedly took "investment monies" from SAAP and disbursed them among themselves in exchange for misrepresented oil leases. ( Id. ) Although the allegations in Count VI are somewhat vague, SAAP, in its response brief, explains exactly how Basil benefited from the Defendants' receipt of the "investment monies."

According to SAAP, Basil was the attorney responsible for handling four separate closings related to the purchase of the oil leases. (Pls.' Resp. DN 43, p. 8 (citing First Am. Compl., DN 34, ¶¶ 40-74, 176). SAAP asserts that the "reasonable inference from the facts pled is that Mr. Basil - in rendering services' as the closing attorney - was provided compensation from funds directly (or traceable) to the over $1.5 million tendered by SAAP." ( Id. ) SAAP alleges that Basil was unjustly enriched because "[i]t is inequitable for [him] to keep the funds he was paid in connection with his services' because [SAAP] will prove that transactions were a fraud." ( Id. ) Furthermore, SAAP acknowledges that "[t]he specific amounts and how payments were made to Defendant Basil remain unknown to [it] at this time." ( Id. )

SAAP's allegations are insufficient to state a claim for unjust enrichment. It clearly acknowledges in its response brief that it did not make any payment directly to Basil and does not know what amounts he may have received. Even more telling is SAAP's admission that Basil received payment from the other Defendants for his services as an attorney in conjunction with the closings and not from SAAP as consideration for the ...

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